Economic activities include all activities that involve the creation and distribution of goods and services. Economic activities are divided into three categories: the primary sector, secondary sector, and tertiary sector.

• Agriculture, dairy farming, poultry, fishing, mining, and forestry are examples of primary sector activities that use natural resources to produce natural goods. Agriculture and related sectors are other names for the primary sector.
• Activities in the secondary sector include those that use natural products or other raw materials in the industrial manufacturing of goods. The industrial sector is another name for the secondary sector.
• Tertiary sector activities include education, healthcare, accounting, legal services, law and order, fire-fighting, and office administration, which support the manufacturing and distribution of goods produced in the primary and secondary sectors. The services sector is another name for the tertiary sector. Primary, secondary, and tertiary economic activities are all interdependent.

Creation of more Employment

By 2050, India is expected to have the world’s second-largest economy. Agriculture, manufacturing, and service are the three main sectors of the Indian economy. India has surpassed both France and the United Kingdom to become the world’s fifth-largest economy in 2019, according to the most recent ‘World Economic League Table 2020’ report.

Sectors of the Indian Economy

Economic activities generate commodities and services, whereas sectors are groups of economic activity classified by certain characteristics. The Indian economy can be divided into numerous sectors based on ownership, labor conditions, and the nature of the operations. 

 We are engaged in primary sector activity when we produce a good using natural resources. The secondary sector includes activities that involve the transformation of natural products into other forms using manufacturing methods associated with industrial activity. Following the primary and secondary sectors, there is a third category of activities that is distinct from the first two and falls under the tertiary sector. These are activities that help to grow the primary and secondary sectors. The primary sector accounted for all economic activity in the early stages of civilization. As a result of the surplus food production, people’s demand for other items increased, resulting in the expansion of the secondary sector. The secondary sector grew in importance during the nineteenth century’s industrial revolution. A support system was required to facilitate industrial activities. Transportation and finance, for example, were critical in sustaining industrial activity.

India’s Economic Sectors are Divided

Indian economic sectors are divided into the following types:

Based on the nature of the activity

• Primary sector
• Secondary sector
• Tertiary sector
• Quaternary sector
• Quinary sector.

Based on the nature of the activity

Primary Sector 

Activities in the primary sector of the economy are carried out directly through the use of natural resources. This category includes agriculture, mining, fishing, forestry, dairy, and other industries. It is so named because it serves as the foundation for everything else. Agricultural and allied sector activities continue to employ approximately 54.6 per cent of the total workforce in the country (Census 2011), accounting for approximately 17.8 percent of the country’s Gross Value Added (GVA) for the fiscal year 2019-20. (at current prices). It is also referred to as the Agriculture and Allied Sector because agriculture, dairy, forestry, and fishing provide the majority of the natural items we consume. People who work in primary activities are referred to as red-collar employees due to the nature of their occupation. While the difficulties caused by COVID-induced lockdowns harmed the performance of the non-agricultural sectors, the agriculture sector grew at a robust rate of 3.4 percent at constant prices during 2020-21.

Secondary Sector 

This category includes industries that produce finished goods from natural materials harvested in the primary sector. This industry includes activities such as industrial production, cotton fabric manufacturing, sugar cane production, and so on. As a result, rather than producing raw materials, the manufacturing sector of a country’s economy produces goods. This sector is commonly referred to as the industrial sector because it is involved in a variety of industries. Employees who work in secondary industries are referred to as blue-collar workers.  According to the most recent estimates on Gross Value Added (GVA), the industrial sector is expected to grow by -9.6 percent in 2020-21, with an overall contribution to GVA of 25.8 percent (FY21). Since 2011-12, the industrial sector’s contribution has been steadily declining. Except for ‘Electricity, gas, water supply, and other utility services,’ whose share of GVA has increased from 2.3 percent in FY12 to 2.7 percent in FY21, the share has decreased across the board.

Tertiary Sector/Service Sector 

The importance of the services sector in the Indian economy has grown steadily, with the sector now accounting for more than 54 percent of the economy and nearly four-fifths of total FDI inflows.  This sector’s activities contribute to the growth of the primary and secondary sectors. Tertiary economic activities do not produce things on their own, but they do help or assist production. Goods transported by truck or train are included in this sector, as are banking, insurance, and finance. It contributes to the value of a product in the same way that the secondary sector does. These are referred to as white-collar jobs. The services sector shrank by nearly 16 percent year on year in the first half of fiscal 2020-21.This decline was driven by a sharp constriction in all sub-areas, especially ‘Exchange, lodgings, transportation, correspondence, and broadcasting administrations,’ which shrunk by 31.5 percent in H1 FY 2020-21. According to preliminary estimates, the services sector’s Gross Value Added (GVA) will contract by 8.8 percent in 2020-21, after growing by 5.5 percent in 2019-20. Interestingly, despite global disruptions, FDI inflows into the services sector increased by 34% year on year between April and September 2020, reaching US$ 23.61 billion.

Quaternary sector

Because these are specialized tertiary operations in the ‘Knowledge Sector,’ they require their own classification. The quaternary sector is the intellectual side of the economy. It is the procedure that enables entrepreneurs to innovate and improve the quality of the economy’s services. Employees in this category work in office buildings, elementary schools, and university classrooms, hospitals and doctors’ offices, theatres, accounting firms, and brokerage firms. Like other tertiary functions, quaternary activities can be outsourced.

Quinary Sector 

The quinary sector is the economic sector that makes the most important decisions. This includes the government, which is responsible for passing legislation. It also includes the most influential decision-makers in business, trade, and education. These are services that concentrate on the creation, reorganization, and interpretation of new and existing ideas, as well as data interpretation and the application and evaluation of new technology. Senior executives, government officials, research scientists, financial and legal consultants, and other professionals in this category are commonly referred to as ‘gold collar’ professionals. They are a subset of the tertiary area, addressing the specific and exceptionally repaid abilities of senior business chiefs, government authorities, research researchers, monetary and legitimate advisors, and others.

Employment distribution and creation

The Tertiary sector has overtaken agriculture as the largest contributor to India’s GDP. The primary sector is the largest employer, employing more than half of the working population. The increase in manufacturing and services production has not been matched by an increase in employment opportunities in these sectors. The primary sector accounts for only 25% of GDP, indicating low productivity because agriculture employs more people than is necessary.

Because some agricultural workers only appear to be employed, removing a few workers would have no effect on agricultural production. Underemployment, also known as disguised unemployment, is a term used to describe this situation. Surplus workers could be put to better use elsewhere. Many workers in the manufacturing and service sectors are unemployed.

More job opportunities can be created by:

•  Improving rural infrastructure 
•  Providing farmers with easy, affordable loans to boost production 
• Promoting agro-based industries such as crushers, grain polishing mills, and cold storage facilities
• Expansion of education and healthcare services 
• Promotion of the tourism industry 
• Proper implementation of job creation schemes

NREGA

The National Rural Employment Guarantee Act (NREGA) appeared on the seventh of September 2005. It was needed to decide a consistent issue in India; the endemic issue of joblessness and underemployment in country India. This underemployment causes obliged relocation, a few short or possibly discontinuous and the rest extremely intense, from commonplace areas to the metropolitan regions. With constrained improvement comes responsibility, cash related subjugation and a destitution trap.
Through the NREGA, the Government ensures something like 100 days of pay work in every cash related year to each family whose grown-up individuals volunteer to do semi/ignoble manual work. The Act is transparently (there are basic contrasts) displayed on the accomplishment Employment Guarantee Scheme in Maharashtra. This is likely one of the most thoroughly centered around security net endeavors on the planet.

What does the Act incorporate?

The unequivocally imparted objective of the Act is the ‘Game plan of solid resources and supporting the occupation asset base of the common poor’. The Act guides all state gatherings to support real plans for its execution, spread out constructions and take satisfactory authoritative confirmations to upset abuse. The Act ensures 100 days of work for each family. It exhibits least wages that will be paid. In the Maharashtra EGS the wages would be fixed to simply under market rates to guarantee self-focusing in on.

The likely gains of the Act are clear. There have been heap plans in execution for giving work to poor people. In any case, these have been more similar to presents. The NREGA isn’t give. It infers that the public power persevering through its obligation to give work to penniless people. 

Frequently Asked Questions

Q 1. Despite the fact that the tertiary sector accounts for the majority of GDP, the primary sector employs the greatest number of people. Discuss.

Answer-

• This is due to a lack of job creation in the secondary and tertiary sectors. 
• Despite an increase in industrial production of goods by eight times, employment in the industry increased by only 2.5 times. 
• Similarly, in the tertiary sector, output increased 11 times while employment increased less than three times. 

As a result, more than half of the population is reliant on the primary sector, which accounts for only one-quarter of GDP.

Q 2. Why is it that only final goods and services are considered when calculating national income?

Answer-

 When calculating National Income, only final goods and services are considered because: 

• Final goods are goods that have passed through the manufacturing process and are ready for final consumption and investment. 
• The value of final goods already includes the value of all intermediate goods used in their production. If all of the economy’s goods are included in calculating national income, this would create a problem of double counting. 
• This should be avoided because counting the value of any commodity more than once results in an overestimation of national income.

Q 3. What does it mean to be underemployed? Which economic sector has the most favorable employment conditions? Moreover, why?

Answer-

A condition in which everyone appears to be working but no one is fully employed. This is a case of underemployment. People in such jobs are unable to fully utilize their potential and capacity. It belongs to the primary sector because-

• The majority of this sector is made up of the poorest members of society.
• The majority of those working in this industry are illiterate or semi-literate.

Q 4. Why is the tertiary sector in India becoming more important? Explain.

Answer-

• In any country, several basic services such as transportation, banking, insurance, and educational institutions are required, and the government must assume responsibility for their provision.
• The growth of agriculture and industry leads to the growth of services such as transportation, trade, and storage. 
• As income levels rose, certain segments of the population began to demand a variety of services such as dining out, tourism, private hospitals, and so on. 
• Certain new services, such as those based on information and communication technology, have grown in importance.

Q 5. Do you think it’s useful to categories economic activities as primary, secondary, or tertiary? Please explain how.

Answer-

The categorization of economic activities into primary, secondary, and tertiary is useful because it provides information on how and where people in a country are employed. This also aids in determining which sectors of economic activity contribute the most and least to the country’s GDP and per capita income.

If the tertiary sector grows much faster than the primary sector, it implies that agriculture is depleting, and the government must take steps to correct this. We can only be aware that the agricultural profession is becoming unpopular or regressive if we know which sector it belongs to. As a result, it is necessary to categories economic activities into these three basic sectors in order to ensure smooth economic administration and development.